The National Residential Landlords Association (NRLA) has argued that student landlords will be some of the “worst affected” by the proposed removal of fixed-term tenancies and the repeal of section 21 ‘no fault’ evictions.
The government’s draft Renters (Reform) Bill, which was introduced to parliament in May this year, has proposed to end fixed-term tenancies, moving to periodic tenancies which don’t have an end date.
This will mean that tenants will be able to stay in their home until they decide to end the tenancy by giving two months’ notice, or if the landlord can evidence a valid ground for possession.
It will allow tenants to leave poor quality properties without remaining liable for the rent, or to move more easily when their circumstances change.
NRLA said removing fixed-term tenancies will mean landlords will no longer be able to ensure incoming student tenants each academic year.
As a result, the organisation has proposed two amendments to the bill: mandatory ground for possession, with the aim of providing landlords with a legal basis to regain possession of their properties when needed; and a moratorium on tenants serving notice — which would guarantee a minimum length of tenancy — offering landlords some certainty and tenants flexibility.
Professionals within the specialist finance sector have had their say on the reforms.
Kundan Bhaduri, executive director at The Kushman Group, commented: “While its intentions seem noble and it is being touted as a 'reform', this [bill] risks causing unintended havoc in the rental market, particularly for student landlords.
“I think there are very real and detrimental consequences the proposed changes could bring to the PRS in general, and student HMOs in particular.
“The proposed removal of fixed-term tenancies, coupled with the abolition of section 21 prima facie appear to be a push towards tenant empowerment but, in reality, it will completely disrupt the well-established and functioning model of student housing in this country.
“While the government's intent to provide equitable treatment for all tenants is applaudable, it must not come at the expense of destabilising the student housing sector itself.”
Stephen Todd, co-founder and CCO of VAS Group, added: “As with any large reform, it will affect the whole rental market, which unfortunately means there will be some scenarios where [it] is not beneficial.
“It creates additional, unwanted uncertainties for many, and the government could have gone further to protect landlords in the student accommodation market.
“Realistically, students only want their accommodation for a part of the year and do not want to continue in summer months, whereas AST agreements are annual rolling agreements.
“Only time will tell how the reform will work out, however the BTL market yet again must adjust their risk appetite, taking into account additional uncertainties — which landlords could do without.
“The vetting process for landlords to get good tenants will never be as important when the reform comes into effect.”
Paul Elliott, managing director at Propp, also said: “This is a perfect example of government policy trying to take a one-size-fits-all approach to a sector that is far more nuanced.
"While the principle of affording the same rights to all tenants in the PRS sounds great, as this issue shows, not all tenants want the same rights — it would be far more sensible to approach any reforms by asking ‘How can we provide tenants with more security and certainty?’ and then consider how this need varies across the PRS.”
